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CS Professional · Insolvency and Bankruptcy - Law and Practice · Resolution Strategies (Elective 7.5)

In the first CoC meeting of Kaveri Steels Ltd, financial creditors holding 70% of the voting share vote to replace the IRP with another insolvency professional, Mr. Rao. What must the CoC do next under Section 22?

The CoC must file an application before the Adjudicating Authority proposing Mr. Rao, along with his written consent in the specified form. The Adjudicating Authority then sends the name to the Board and appoints him only after the Board confirms. The CoC cannot simply install him by its own decision.

  1. ACommunicate the decision to the corporate debtor only, and Mr. Rao takes charge at once
  2. BFile an application before the Adjudicating Authority for Mr. Rao's appointment, along with his written consent in the specified formCorrect
  3. CApply directly to the IBBI Board, which will appoint Mr. Rao without involving the Adjudicating Authority
  4. DWait for the IRP to nominate Mr. Rao as his successor

Explanation

Replacement needs a vote of not less than 66% of the voting share, which 70% satisfies. Under Section 22(3)(b) the CoC must then file an application before the Adjudicating Authority for appointment of the proposed RP, with his written consent in the specified form. The Adjudicating Authority forwards the name to the Board and appoints after confirmation; the CoC cannot install Mr. Rao on its own.

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